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Corruption and cross-border investment in emerging markets: Firm-level evidence

  • Javorcik, Beata S.
  • Wei, Shang-Jin

This paper studies the joint impact of corruption on the entry mode and volume of inward foreign direct investment (FDI) using a unique firm-level data set. We find that corruption not only reduces inward FDI, but also shifts the ownership structure towards joint ventures. The latter finding supports the view that corruption increases the value of using a local partner to cut through the bureaucratic maze. However, R&D intensive firms are found to favor sole ownership.

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File URL: http://www.sciencedirect.com/science/article/B6V9S-4VH4D7P-1/2/5f1433abd8ab1867199b6058407a42c0
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Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 28 (2009)
Issue (Month): 4 (June)
Pages: 605-624

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Handle: RePEc:eee:jimfin:v:28:y:2009:i:4:p:605-624
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30443

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  2. Shang-Jin Wei, 2000. "How Taxing is Corruption on International Investors?," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 1-11, February.
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  18. James R. Hines, Jr., 1995. "Forbidden Payment: Foreign Bribery and American Business After 1977," NBER Working Papers 5266, National Bureau of Economic Research, Inc.
  19. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  20. Grubaugh, Stephen G, 1987. "Determinants of Direct Foreign Investment," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 149-52, February.
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